Volkswagen (VWAGY, Financial) reported a 7% decline in global vehicle deliveries for the third quarter, highlighting the challenges facing the European automotive sector, such as weak demand in China and high production costs domestically. European automakers also face potential trade tensions between China and the European Union, as the EU considers imposing import tariffs on Chinese electric vehicles due to subsidy-related issues.
In response to sluggish demand, fierce competition from China, and the challenges of vehicle electrification, Volkswagen is undertaking significant reforms. The company's Executive Committee member, Marco Schubert, emphasized the importance of achieving a better cost base in Germany to maintain future success in this challenging environment. Volkswagen is even considering the unprecedented move of closing a plant in Germany.
During the third quarter, Volkswagen's sales in China decreased by 15% to 711,500 units, while global sales fell to 2.176 million units. Rivals BMW and Mercedes have also reported that weak demand and intense competition in China have impacted their sales this quarter.
Schubert noted that Volkswagen's situation in China is "particularly severe," with fierce competition from local manufacturers offering more affordable electric models, which has pressured Volkswagen's market share. Despite these challenges, the company has reduced production costs for fully electric vehicles in China and maintained profitability over market share. As a result, sales of all-electric vehicles in China grew by 5.2% to 57,500 units.
However, globally, deliveries of fully electric vehicles fell by 9.8% to 189,400 units, primarily due to a 41% decline in U.S. sales. Additionally, General Motors has lowered its annual sales forecast for the second time in less than three months, predicting a decrease to approximately nine million vehicles for the year.
